Intrinsic value of Synaptics - SYNA

Previous Close

$38.43

  Intrinsic Value

$24.09

stock screener

  Rating & Target

sell

-37%

Previous close

$38.43

 
Intrinsic value

$24.09

 
Up/down potential

-37%

 
Rating

sell

We calculate the intrinsic value of SYNA stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,753
  1,793
  1,839
  1,891
  1,948
  2,011
  2,079
  2,154
  2,233
  2,319
  2,411
  2,509
  2,613
  2,724
  2,841
  2,965
  3,097
  3,237
  3,384
  3,539
  3,703
  3,876
  4,059
  4,251
  4,453
  4,666
  4,891
  5,127
  5,375
  5,636
Variable operating expenses, $m
  1,673
  1,711
  1,754
  1,803
  1,856
  1,915
  1,979
  2,049
  2,124
  2,204
  2,259
  2,351
  2,448
  2,552
  2,662
  2,779
  2,902
  3,033
  3,171
  3,317
  3,470
  3,633
  3,803
  3,984
  4,173
  4,373
  4,583
  4,804
  5,037
  5,282
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,673
  1,711
  1,754
  1,803
  1,856
  1,915
  1,979
  2,049
  2,124
  2,204
  2,259
  2,351
  2,448
  2,552
  2,662
  2,779
  2,902
  3,033
  3,171
  3,317
  3,470
  3,633
  3,803
  3,984
  4,173
  4,373
  4,583
  4,804
  5,037
  5,282
Operating income, $m
  79
  82
  85
  88
  92
  96
  100
  105
  110
  115
  152
  158
  164
  171
  179
  187
  195
  204
  213
  223
  233
  244
  255
  267
  280
  294
  308
  323
  338
  355
EBITDA, $m
  168
  172
  176
  181
  186
  192
  199
  206
  214
  222
  231
  240
  250
  261
  272
  284
  296
  310
  324
  339
  354
  371
  388
  407
  426
  447
  468
  491
  514
  539
Interest expense (income), $m
  0
  12
  12
  13
  14
  14
  15
  16
  18
  19
  20
  21
  23
  24
  26
  28
  30
  32
  34
  36
  38
  41
  44
  46
  49
  52
  56
  59
  63
  66
  70
Earnings before tax, $m
  68
  70
  72
  75
  77
  80
  84
  87
  91
  95
  130
  135
  140
  145
  151
  157
  163
  170
  177
  184
  192
  200
  209
  218
  228
  238
  249
  260
  272
  284
Tax expense, $m
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  35
  36
  38
  39
  41
  42
  44
  46
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
  73
  77
Net income, $m
  49
  51
  53
  54
  56
  59
  61
  64
  66
  69
  95
  99
  102
  106
  110
  114
  119
  124
  129
  134
  140
  146
  153
  159
  166
  174
  181
  190
  198
  207

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,219
  1,247
  1,279
  1,315
  1,355
  1,398
  1,446
  1,498
  1,553
  1,613
  1,676
  1,745
  1,817
  1,894
  1,976
  2,062
  2,154
  2,251
  2,353
  2,461
  2,575
  2,696
  2,823
  2,956
  3,097
  3,245
  3,401
  3,565
  3,738
  3,919
Adjusted assets (=assets-cash), $m
  1,219
  1,247
  1,279
  1,315
  1,355
  1,398
  1,446
  1,498
  1,553
  1,613
  1,676
  1,745
  1,817
  1,894
  1,976
  2,062
  2,154
  2,251
  2,353
  2,461
  2,575
  2,696
  2,823
  2,956
  3,097
  3,245
  3,401
  3,565
  3,738
  3,919
Revenue / Adjusted assets
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.439
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
Average production assets, $m
  287
  294
  302
  310
  319
  330
  341
  353
  366
  380
  395
  411
  428
  447
  466
  486
  508
  531
  555
  580
  607
  636
  666
  697
  730
  765
  802
  841
  882
  924
Working capital, $m
  131
  134
  138
  142
  146
  151
  156
  162
  168
  174
  181
  188
  196
  204
  213
  222
  232
  243
  254
  265
  278
  291
  304
  319
  334
  350
  367
  385
  403
  423
Total debt, $m
  227
  239
  253
  268
  285
  304
  324
  346
  370
  396
  423
  452
  483
  516
  551
  588
  627
  669
  713
  759
  808
  859
  914
  971
  1,031
  1,094
  1,161
  1,231
  1,305
  1,383
Total liabilities, $m
  522
  534
  547
  563
  580
  599
  619
  641
  665
  690
  718
  747
  778
  811
  846
  883
  922
  963
  1,007
  1,053
  1,102
  1,154
  1,208
  1,265
  1,325
  1,389
  1,456
  1,526
  1,600
  1,678
Total equity, $m
  697
  713
  731
  752
  775
  800
  827
  857
  888
  922
  959
  998
  1,039
  1,083
  1,130
  1,180
  1,232
  1,287
  1,346
  1,408
  1,473
  1,542
  1,615
  1,691
  1,771
  1,856
  1,945
  2,039
  2,138
  2,242
Total liabilities and equity, $m
  1,219
  1,247
  1,278
  1,315
  1,355
  1,399
  1,446
  1,498
  1,553
  1,612
  1,677
  1,745
  1,817
  1,894
  1,976
  2,063
  2,154
  2,250
  2,353
  2,461
  2,575
  2,696
  2,823
  2,956
  3,096
  3,245
  3,401
  3,565
  3,738
  3,920
Debt-to-equity ratio
  0.330
  0.340
  0.350
  0.360
  0.370
  0.380
  0.390
  0.400
  0.420
  0.430
  0.440
  0.450
  0.460
  0.480
  0.490
  0.500
  0.510
  0.520
  0.530
  0.540
  0.550
  0.560
  0.570
  0.570
  0.580
  0.590
  0.600
  0.600
  0.610
  0.620
Adjusted equity ratio
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572
  0.572

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  49
  51
  53
  54
  56
  59
  61
  64
  66
  69
  95
  99
  102
  106
  110
  114
  119
  124
  129
  134
  140
  146
  153
  159
  166
  174
  181
  190
  198
  207
Depreciation, amort., depletion, $m
  88
  90
  91
  93
  95
  97
  99
  101
  104
  107
  79
  82
  86
  89
  93
  97
  102
  106
  111
  116
  121
  127
  133
  139
  146
  153
  160
  168
  176
  185
Funds from operations, $m
  138
  141
  144
  147
  151
  155
  160
  165
  170
  176
  174
  181
  188
  195
  203
  212
  221
  230
  240
  251
  262
  273
  286
  299
  312
  327
  342
  358
  375
  392
Change in working capital, $m
  3
  3
  3
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
Cash from operations, $m
  135
  137
  140
  143
  147
  151
  155
  160
  164
  170
  167
  173
  180
  187
  195
  202
  211
  220
  229
  239
  249
  260
  272
  284
  297
  311
  325
  340
  356
  373
Maintenance CAPEX, $m
  -56
  -57
  -59
  -60
  -62
  -64
  -66
  -68
  -71
  -73
  -76
  -79
  -82
  -86
  -89
  -93
  -97
  -102
  -106
  -111
  -116
  -121
  -127
  -133
  -139
  -146
  -153
  -160
  -168
  -176
New CAPEX, $m
  -5
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
Cash from investing activities, $m
  -61
  -64
  -67
  -68
  -71
  -74
  -77
  -80
  -84
  -87
  -91
  -95
  -99
  -104
  -108
  -113
  -119
  -125
  -130
  -136
  -143
  -149
  -157
  -165
  -172
  -181
  -190
  -199
  -209
  -219
Free cash flow, $m
  73
  73
  74
  75
  75
  76
  78
  79
  81
  83
  76
  78
  81
  83
  86
  89
  92
  95
  99
  102
  106
  111
  115
  120
  125
  130
  135
  141
  147
  154
Issuance/(repayment) of debt, $m
  10
  12
  14
  15
  17
  19
  20
  22
  24
  26
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  67
  70
  74
  78
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  10
  12
  14
  15
  17
  19
  20
  22
  24
  26
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  67
  70
  74
  78
Total cash flow (excl. dividends), $m
  84
  85
  88
  90
  92
  95
  98
  101
  105
  108
  104
  107
  112
  116
  121
  126
  131
  137
  143
  149
  155
  162
  169
  177
  185
  193
  202
  211
  221
  231
Retained Cash Flow (-), $m
  -14
  -16
  -18
  -21
  -23
  -25
  -27
  -29
  -32
  -34
  -36
  -39
  -41
  -44
  -47
  -50
  -52
  -55
  -59
  -62
  -65
  -69
  -73
  -76
  -81
  -85
  -89
  -94
  -99
  -104
Prev. year cash balance distribution, $m
  57
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  127
  69
  69
  69
  70
  70
  71
  72
  73
  74
  67
  69
  70
  72
  74
  76
  79
  81
  84
  87
  90
  93
  97
  100
  104
  108
  113
  117
  122
  127
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  121
  63
  60
  57
  54
  51
  48
  45
  42
  39
  32
  29
  27
  24
  22
  19
  17
  15
  13
  11
  9
  8
  6
  5
  4
  3
  2
  2
  1
  1
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Synaptics Incorporated is engaged in the development, marketing and sale of intuitive human interface solutions for electronic devices and products. The Company is a developer and supplier of custom-designed human interface product solutions that enable people to interact with a range of mobile computing, communications, entertainment and other electronic devices. Its products include ClearPad, ClearView, TouchView, Natural ID, TouchPad, SecurePad, ClickPad and ForcePad. Its other product solutions include dual pointing solutions, TouchStyk, and TouchButtons. Its dual pointing solutions offer TouchPad with a pointing stick in a single notebook computer, enabling users to select their interface of choice. TouchStyk is a self-contained pointing stick module that uses capacitive technology similar to that used in its TouchPad. TouchButtons provide capacitive buttons and scrolling controls for an interface solution designed to replace mechanical buttons.

FINANCIAL RATIOS  of  Synaptics (SYNA)

Valuation Ratios
P/E Ratio 27.2
Price to Sales 0.8
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 8.7
Price to Free Cash Flow 10.9
Growth Rates
Sales Growth Rate 3.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -6.1%
Cap. Spend. - 3 Yr. Gr. Rate -4.5%
Financial Strength
Quick Ratio 25
Current Ratio 0
LT Debt to Equity 27.3%
Total Debt to Equity 29.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 3.8%
Ret/ On Assets - 3 Yr. Avg. 5.9%
Return On Total Capital 5.2%
Ret/ On T. Cap. - 3 Yr. Avg. 8.4%
Return On Equity 6.8%
Return On Equity - 3 Yr. Avg. 10.4%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 30.5%
Gross Margin - 3 Yr. Avg. 33.1%
EBITDA Margin 8.9%
EBITDA Margin - 3 Yr. Avg. 11.9%
Operating Margin 3.8%
Oper. Margin - 3 Yr. Avg. 6%
Pre-Tax Margin 3.6%
Pre-Tax Margin - 3 Yr. Avg. 5.8%
Net Profit Margin 2.9%
Net Profit Margin - 3 Yr. Avg. 4.5%
Effective Tax Rate 19.7%
Eff/ Tax Rate - 3 Yr. Avg. 18.7%
Payout Ratio 0%

SYNA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SYNA stock intrinsic value calculation we used $1718.2 million for the last fiscal year's total revenue generated by Synaptics. The default revenue input number comes from 0001 income statement of Synaptics. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SYNA stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for SYNA is calculated based on our internal credit rating of Synaptics, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Synaptics.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SYNA stock the variable cost ratio is equal to 95.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for SYNA stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Synaptics.

Corporate tax rate of 27% is the nominal tax rate for Synaptics. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SYNA stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SYNA are equal to 16.4%.

Life of production assets of 4.9 years is the average useful life of capital assets used in Synaptics operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SYNA is equal to 7.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $740.2 million for Synaptics - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 34.614 million for Synaptics is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Synaptics at the current share price and the inputted number of shares is $1.3 billion.

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COMPANY NEWS

▶ Synaptics: Fiscal 1Q Earnings Snapshot   [04:33PM  Associated Press]
▶ Is Synaptics About to Make a Comeback?   [Nov-06-18 11:27AM  Motley Fool]
▶ 3 Small Caps on Sale   [06:00AM  Morningstar]
▶ Can Synaptics Live Up to Its Promise of a Turnaround?   [Aug-31-18 10:15AM  Motley Fool]
▶ Synaptics: Fiscal 4Q Earnings Snapshot   [04:49PM  Associated Press]
▶ [$$] Auditing in crisis   [12:00AM  Financial Times]
▶ Why a Synaptics-Dialog Deal Doesnt Make Sense   [Jun-25-18 04:23PM  Motley Fool]
▶ Company News For Jun 21, 2018   [Jun-21-18 10:12AM  Zacks]
▶ Synaptics shares soar after it confirms takeover talks with Dialog Semiconductor   [Jun-20-18 05:02PM  American City Business Journals]
▶ AMD Stock Target Raised While Intel Stock Target Trimmed   [04:20PM  Investor's Business Daily]
▶ Why Synaptics Inc. Stock Popped Today   [12:45PM  Motley Fool]
▶ After-hours buzz: WBA, SBUX & more   [Jun-19-18 06:10PM  CNBC]
▶ There's a Special Place in Hell for Apple's Suppliers   [Jun-12-18 01:00AM  Bloomberg]
▶ Why Synaptics, iQiyi, and Savara Jumped Today   [Jun-08-18 04:31PM  Motley Fool]
▶ Synaptics to Present at Upcoming Investor Conferences   [May-11-18 04:05PM  GlobeNewswire]
▶ Synaptics shares fall after fiscal Q3 sales miss   [May-09-18 04:59PM  MarketWatch]
▶ Synaptics: Fiscal 3Q Earnings Snapshot   [04:31PM  Associated Press]
▶ How Badly Would a Loss of Apple Business Hurt Synaptics?   [Apr-09-18 12:37PM  Motley Fool]
▶ 3 Technologies Apple Inc. Could Be Bringing In-House   [Mar-21-18 07:00PM  Motley Fool]

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